Recall Widens

SAN FRANCISCO, Aug 25 (Reuters) - Apple Computer Inc. will
recall 1.8 million lithium-ion notebook PC batteries after nine
overheated, the second major recall in the past 10 days
involving battery cells made by Sony Corp.
The recall, announced on Thursday, is the second-biggest in
U.S. history involving electronics or computers. Just last
week, No. 1 PC maker Dell Inc. recalled 4.1 million lithium-ion
batteries, also with Sony-made cells.
Apple, like Dell, said it did not expect any "material"
financial impact on its business. Sony, however, said the two
recalls would cost it between 20 billion yen and 30 billion
yen, or $172 million to $258 million.
The higher figure equals about one-fourth of Sony's net
profit forecast for the current business year to March.
Sony's stock slumped more than 3 percent in early morning
trade in Tokyo on Friday to fall below the 5,000 yen level for
the first time in about one month. It has since clawed back
some ground, and was down 1.57 percent at 5,020 yen by 0131
GMT.
Apple shares rose slightly on Nasdaq.
"Sony clearly has a problem here," said Tim Bajarin,
principal analyst at Creative Strategies in San Jose,
California. "There's a problem with the batteries overheating."
Bajarin noted, however, that in Apple's case there were no
reported notebook fires, while several of the recalled Dell
computers had erupted in flames. Dell said it had reports of
six batteries overheating, but no injuries were reported.
Apple's devices caused minor burns to two users, U.S.
safety regulators said.
The recall tally involving Sony batteries has now reached
nearly 6 million and highlights the potential hazards of
lithium-ion batteries, which also power a wide range of
portable devices including music players and cellphones.
About 100 million notebook computers are sold annually
worldwide, Bajarin said. They are the fastest growing segment
of the personal computer market.
Tokyo-based Sony on Thursday said in a separate statement
that it did not anticipate further recalls of batteries using
the potentially faulty cells.
Cupertino, California-based Apple will recall 1.1 million
batteries sold with notebook computers in the United States and
700,000 abroad, the U.S. Consumer Product Safety Commission
said.
"Our No. 1 priority is to recall and replace the affected
batteries free of charge," Apple spokesman Steve Dowling said.
The reported overheating incidents were due to "contamination"
in the Sony battery cells, he said, but added that he did not
have further details.
Roger Kay, president of market researcher Endpoint
Technologies Associates, said the affected Sony battery cells
might overheat or catch fire when tiny metal fragments,
remnants of the manufacturing process, break loose and cause
short-circuits. Dell also pointed to "contamination" in the
Sony battery cells as the cause of its problems.
RECALL PERIOD
The batteries were sold with Apple iBook G4 and PowerBook
G4 computers from October 2003 through this month, according to
the safety commission. None of Apple's most recent notebooks
using microprocessors from Intel Corp. are affected, Dowling
said.
Apple had said last week after the Dell recall that it was
reviewing its notebook batteries to ensure they met its
standards.
"The key message to consumers is these lithium-ion
batteries can actually overheat and pose a fire hazard," said
Scott Wolfson, spokesman for the Consumer Product Safety
Commission in Washington.
Shares of Apple closed up 50 cents at $67.81 on Nasdaq.
Earlier, they had dipped as low as $66.27 after the recall
announcement.
The recall follows a smaller Apple recall of lithium-ion
batteries in certain iBook G4 and PowerBook G4 notebooks sold
worldwide from October 2004 through May 2005. Those batteries
were made by LG Chem Ltd. of South Korea, according to Apple's
Web site.
Dell of Round Rock, Texas, last week began a voluntary
recall of 2.7 million batteries sold in the United States and
1.4 million sold overseas. The Dell-branded batteries were in
computers sold from April 2004 through July 18 of this year.
(Additional reporting by Ritsuko Ando in New York, and Aiko
Hayashi and Nathan Layne in Tokyo)